Mr. Speaker, I am quite honoured to participate in this debate on the motion that has been brought forward by my colleagues from the Bloc.
In their motion before the House, they denounce the government for two recent actions that were included in the budget. One is the establishment of a national security commission. The other is the unilateral amendment of the equalization formula. Both issues are important, but I must say that they are incorrectly phrased by my colleagues from the Bloc. I think it is important that we take the time in the House to debate this issue and look over some of these items.
First of all, I am not personally opposed to the establishment of a national securities regulator. However, it has to be done in a constitutionally sound manner. Therefore, as my leader has stated, the government should make reference to the Supreme Court prior to proceeding with this plan. I think that is the only fair way and the only way to know that we are acting within the law as well as with the authorization and support of the Supreme Court.
As a party, we remain committed to exploring the national system of securities regulators in cooperation with the provinces and in accordance with the Constitution to enhance coordination and regulation, while maintaining the ability to address unique regional needs. If the United States, our largest trading partner, had a common securities commission and regulator for every state, one can only imagine that it would be very difficult. One of the things we have to realize in this global crisis that is taking place is the important need for us to cooperate and have agencies working together to cut through red tape. That is so important. I think even my colleagues from the Bloc would understand the importance of removing red tape. Red tape can be an obstacle to economic growth. We are living in a global village and times have changed.
It is important to know that securities legislation in Canada and around the world has two main objectives: to protect investors and ensure that capital markets are efficient, fair and transparent. Regulatory discrepancies among jurisdictions in terms of public disclosure and information sharing between companies and investors can create distorted markets and increase risk to investors, both of which are undesirable for economic stability and competitiveness.
Generally, securities regulators administer four broad areas. First, raising capital through sale of securities such as private placements and initial price offerings. Second, ensuring that companies are transparent and continuously disclose relevant investment information. Third, enforcing securities regulations and deterring misleading or deceitful behaviour; and fourth, ensuring traders of securities are qualified, reputable and licensed.
Some provinces have taken different views on this issue. We know that Alberta, Manitoba and Quebec currently oppose the idea of a single regulator, while my home province of Ontario and British Columbia are voicing their support. In October of 2007, the National Assembly of Quebec unanimously passed a motion for the federal government to abandon its Canada-wide securities commission project. It has been stated many times here in the House by my colleagues from the Bloc.
One argument presented by the provinces will be that securities regulation is clearly a provincial area of jurisdiction under the property and civil rights power of the Constitution subsection 92(13) and the federal government should not intrude. In today's regulatory environment, securities in Canada are subject to the rules and regulations of 13 different provincial and territorial regulators, creating a fragmented regulatory framework that serves to hamper investment in Canadian companies.
Some of the specific criticisms of the current fragmented approach include, for example, trying to raise capital. It is expensive to comply with all the provincial laws. Raising capital is time sensitive and compliance with all of the different rules hold up commencement of trading.
Investors in smaller provinces can be denied investment opportunities. Because of the small and fragmented nature of current securities regulation, enforcement is difficult and not adequately funded.
In support of the current multi-jurisdictional model, provinces argue: it allows for the development of more innovative ideas that can adapt and respond better to unique regional markets; it can more efficiently enforce regulation as they acquire experience and expertise in their regional markets; a single securities regulator may impose compliance rules tailored for larger multinational users and may squeeze out smaller regional companies from accessing capital; and it protects regional securities infrastructure that provinces have developed with accountants, lawyers, underwriters and other professionals.
These are some of the issues that have been raised both for and against by the different provincial jurisdictions. These arguments are valid on both sides.
At the same time, I would go back to my earlier argument, and that is, given the financial uncertainty happening around the world and the crisis also taking place, this would be a unique time to go forward with this initiative provided that it does have constitutional support.
We should look as well to see if we can move forward in co-operation with the provinces. It is important that we have the provinces on our side in dealing with this issue. The government talks at great length about its co-operation with the provinces, but it has the backs up of many provinces that feel they are not being treated fairly.
To address the criticisms, all the provinces and territories, with the exception of Ontario, have created the Canadian Securities Administrators, a forum for securities regulators to coordinate and harmonize Canada's regulatory system. The CSA, as it is called, has successfully implemented several initiatives, including a passport system for a single window of access and recognition to participate in all of the regional capital markets.
On March 17, 2008, the passport securities system moved to its next step and any prospectus approved in one jurisdiction will be recognized in all others save for Ontario. The CSA has also implemented a harmonized Internet SEDAR system for information disclosure and a streamlined national registration system for traders.
In 2006 the Crawford panel, a panel commissioned by the Ontario government to look at securities regulation, recommended adoption of a single securities regulator.
In 2003 the Liberal government set up the wise persons' committee to adopt a single regulator to address the issues of regulatory barriers, fees and enforcement. This was supported at the time by the Canadian Bankers Association and the Investment Dealers Association of Canada. The wise persons' committee recommended a national system based in Ottawa with strong, functionally empowered regional offices in Vancouver, Calgary, Winnipeg, Toronto, Montreal and Halifax.
In 2004 the Liberal government agreed with the CWP conclusion that the best possible securities regulatory structure was a single securities regulator and pledged that it would work with provincial and territorial governments to move this forward.
That is the historical background of what has taken place over time on this issue.
The Conservative government and, in particular, the Minister of Finance consistently stated their intent to implement a national securities regulator in budget 2006. Then the government in March 2007 published “Creating a Canadian Advantage in Global Capital Markets”, which included the creation of this expert panel. This commitment was reiterated in the 2008 budget.
At the request of the Minister of Finance, the International Monetary Fund, in 2008, completed a report calling on Canada to move forward with a single securities regulator. The Minister of Finance appointed a panel of experts to look at the possible creation of a common securities regulator in Canada, headed by Tom Hockin, a former federal Conservative minister of state for finance and a former president of the Investment Funds Institute of Canada.
These are some of the issues that have been addressed both for those who are in favour and who are against a common regulator.
On the second motion by the Bloc Québécois on the issue of equalization, the Minister of Finance, in announcing budget 2007, infamously stated “the long, tiring, unproductive era of bickering between the provincial and federal governments is over”. That was a very short-lived statement, as we all know. It certainly was never realized, except for the very brief second when the minister uttered those words.
In that budget, the Minister of Finance introduced amendments to the equalization formula, amendments the Conservatives believed would fix equalization for good.
Among other things, budget 2007 introduced a return to the measurement standard reflecting the fiscal capacity of all 10 provinces, a new approach to the treatment of natural resource revenues through a 50% exclusion of those revenues from the calculation of equalization payments and, finally, a fiscal capacity cap to ensure that equalization payments did not unfairly bring a receiving province's overall fiscal capacity to a level higher than that of any non-receiving provinces—